For Christmas, Santa brought my husband and me a Wii, with "Fit Plus." Now, every morning, I turn it on and a virtual balance board asks me how I'm doing and whether or not I've eaten breakfast. It congratulates me if I've lost weight and encourages me if I haven't. Today is my Wii update to you.
How are you doing writing down all of your expenses? Really good? Great--keep it up! Not so good? That's okay. You could actually start today and still be on track for nearly all the year. Don't give up! You can do it!
The hardest part of any lifestyle change is beginning. Your goal to gain control of your finances in 2010 is super! Don't let a little slump stop you.
(Now, don't you feel better?)
Be prosperous!
Peggy
Peggy Doviak
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Wednesday, January 20, 2010
Tuesday, January 19, 2010
"The Way You Do The Things You Do"
I am a big fan of Suze Orman, as I think I have already told you. I particularly enjoy her conversations about how the events in our lives impact our financial choices. She is actually participating in a bigger conversation where people in different professions discuss the emotional component of our money.
To illustrate my point, I'm going to give you a fictionalized account of a conversation I have had with many (usually, but not always, female) clients.
"Peggy, I don't know how I got back in debt. I had paid everything off, and suddenly the debt is back."
To which I say something to make them feel better (because they are already beating themselves up; I don't need to help). Then, I start asking questions about how life is--work, relationships, attaining goals, etc.--and because I work from the beginning to establish a position of trust, they tend to tell me the truth. 99.9% of the time, something is going wrong somewhere else in the person's life. When I ask about the timing of this other event, it nearly always coincides with the reacquisition of the debt. Why? Because our relationship with our money is impacted by our relationship with other things.
Not only that, once it starts going wrong, it gets worse. Think about the last diet you tried. Somewhere along the way, you ate something not on the "approved" list. What did you do? Well, I have a tendancy to eat everything in sight for the rest of that day. Once I've made a mistake by eating the donut at the office for breakfast, I might as well have fast food for lunch and buttered popcorn that evening as I watch television. I reason that if I've already messed up, what's the point. Well, people make this same mistake with their money. If they make a mistake and buy something they didn't need, they rationalize that they might as well buy two or three other things as well.
Suddenly, you're spiraling out of control. Diets don't work, and budgets don't work, either. They are lifestyle changes.
I close with two pieces of advice: if you're wondering why the debt won't go away, look at other areas of your life. Sometimes, when those situations can be resolved, the money problems resolve themselves. The second piece of advice is whether you are on a diet or a budget and you make a mistake, forgive yourself. Don't compound it out of guilt.
Be prosperous!
Peggy Doviak
To illustrate my point, I'm going to give you a fictionalized account of a conversation I have had with many (usually, but not always, female) clients.
"Peggy, I don't know how I got back in debt. I had paid everything off, and suddenly the debt is back."
To which I say something to make them feel better (because they are already beating themselves up; I don't need to help). Then, I start asking questions about how life is--work, relationships, attaining goals, etc.--and because I work from the beginning to establish a position of trust, they tend to tell me the truth. 99.9% of the time, something is going wrong somewhere else in the person's life. When I ask about the timing of this other event, it nearly always coincides with the reacquisition of the debt. Why? Because our relationship with our money is impacted by our relationship with other things.
Not only that, once it starts going wrong, it gets worse. Think about the last diet you tried. Somewhere along the way, you ate something not on the "approved" list. What did you do? Well, I have a tendancy to eat everything in sight for the rest of that day. Once I've made a mistake by eating the donut at the office for breakfast, I might as well have fast food for lunch and buttered popcorn that evening as I watch television. I reason that if I've already messed up, what's the point. Well, people make this same mistake with their money. If they make a mistake and buy something they didn't need, they rationalize that they might as well buy two or three other things as well.
Suddenly, you're spiraling out of control. Diets don't work, and budgets don't work, either. They are lifestyle changes.
I close with two pieces of advice: if you're wondering why the debt won't go away, look at other areas of your life. Sometimes, when those situations can be resolved, the money problems resolve themselves. The second piece of advice is whether you are on a diet or a budget and you make a mistake, forgive yourself. Don't compound it out of guilt.
Be prosperous!
Peggy Doviak
Wednesday, January 13, 2010
Emergencies in Retirement
First, sorry for the gap yesterday. I got caught up doing other projects--my bad.
Many times, I'm afraid we think of an emergency fund in terms of younger peoople with less job stability, less money in savings, and more monthly bills. However, emergency funds aren't only for the young. Do you need an emergency fund during retirement? Yes, you do. Even if your house is paid off, you pay cash for cars, and you don't carry a credit card balance, you still need an emergency fund during retirement. Two areas loom over your plans--healthcare and a stock market decline.
A reserve fund for healthcare can assist if an unexpected illness has treatments not covered by insurance or if your out-of-pocket is high. If you rely on your investments for monthly income, the worst thing that can happen is the need to sell securities to generate monthly cashflow in the middle of a market turmoil. (Now, by this, I am not saying that buying and holding through anything is correct. A buy and hold strategy actually needs to be implemented as carefully as a trading strategy, but that's a conversation for another day.) Not holding enough cash forces the selling of stocks, bonds, or funds at times you might not want.
How much reserve fund do you need? Well, the healthcare component has a lot to do with the quality of your current insurance (both health and long-term care). Holding at least the deductibles might be wise. The investment emergency fund is much more complicated. I like to hold at least a year of monthly distributions in cash, but I cannot advise you what would work for you in this blog. Everyone's needs are different, and you might need two or three years. I recommend you talk with a CERTIFIED FINANCIAL PLANNER (TM) certificant to help you with this decision.
Retirees are often looking at their life savings in front of them and a significant number of quality years ahead. Planning for financial emergencies at this time can help with your quality of life and your ability to sleep at night.
Be prosperous!
Peggy Doviak
Many times, I'm afraid we think of an emergency fund in terms of younger peoople with less job stability, less money in savings, and more monthly bills. However, emergency funds aren't only for the young. Do you need an emergency fund during retirement? Yes, you do. Even if your house is paid off, you pay cash for cars, and you don't carry a credit card balance, you still need an emergency fund during retirement. Two areas loom over your plans--healthcare and a stock market decline.
A reserve fund for healthcare can assist if an unexpected illness has treatments not covered by insurance or if your out-of-pocket is high. If you rely on your investments for monthly income, the worst thing that can happen is the need to sell securities to generate monthly cashflow in the middle of a market turmoil. (Now, by this, I am not saying that buying and holding through anything is correct. A buy and hold strategy actually needs to be implemented as carefully as a trading strategy, but that's a conversation for another day.) Not holding enough cash forces the selling of stocks, bonds, or funds at times you might not want.
How much reserve fund do you need? Well, the healthcare component has a lot to do with the quality of your current insurance (both health and long-term care). Holding at least the deductibles might be wise. The investment emergency fund is much more complicated. I like to hold at least a year of monthly distributions in cash, but I cannot advise you what would work for you in this blog. Everyone's needs are different, and you might need two or three years. I recommend you talk with a CERTIFIED FINANCIAL PLANNER (TM) certificant to help you with this decision.
Retirees are often looking at their life savings in front of them and a significant number of quality years ahead. Planning for financial emergencies at this time can help with your quality of life and your ability to sleep at night.
Be prosperous!
Peggy Doviak
Monday, January 11, 2010
Financial 911
Those of you of a certain age remember the television show, "Emergency." For those of you who don't, the title gives it away. It was a show with two good-looking paramedics who went on emergency runs to help people deal with unexpected events. We also have unexpected financial emergencies, and it's important that we plan for them as best we can.
In today's economy, if you aren't worried about losing your job, you're lucky. With one cold snap, pipes burst and carpet, appliances, and dry wall suffer. In that same cold snap, going to get the mail can be a treacherous adventure. (Sorry I'm focusing on arctic weather; it just seems so appropriate right now!) The one thing these emergencies have in common is a need for money.
Everyone should have a financial emergency fund. Last week, you began calculating your monthly expenses. Your emergency fund should be equal to three (if your world is extremely stable) to eight (Suze Orman's recommendation) months of these expenses. If this amount of money seems overwhelming, eat it like an elephant--one bite at a time. You don't have to save it all right now. Just make saving the emergency fund a monthly goal.
Where do you keep your emergency fund? The answer is really boring--the bank. Your emergency fund is NOT to be invested in the stock market, mutual funds, or annuities. The only acceptable investment would be in a money market fund. Don't even use a certificate of deposit (CD). Why am I being so picky? Your emergency fund must be safe and liquid (or quickly convertible to cash without loss of principal). Stock market investments aren't safe, even if they're liquid. Annuities (variable) are often not safe or liquid, due to investment subaccounts and surrender periods. CDs are safe (insured by the FDIC), but they aren't liquid--you can't immediately convert them to cash. Savings accounts or money market funds are both safe and liquid.
Don't have a financial emergency, even to meet the cute paramedics. Keep your money safe and sound and know that there is space between you and a financial disaster.
Be prosperous!
Peggy Doviak
In today's economy, if you aren't worried about losing your job, you're lucky. With one cold snap, pipes burst and carpet, appliances, and dry wall suffer. In that same cold snap, going to get the mail can be a treacherous adventure. (Sorry I'm focusing on arctic weather; it just seems so appropriate right now!) The one thing these emergencies have in common is a need for money.
Everyone should have a financial emergency fund. Last week, you began calculating your monthly expenses. Your emergency fund should be equal to three (if your world is extremely stable) to eight (Suze Orman's recommendation) months of these expenses. If this amount of money seems overwhelming, eat it like an elephant--one bite at a time. You don't have to save it all right now. Just make saving the emergency fund a monthly goal.
Where do you keep your emergency fund? The answer is really boring--the bank. Your emergency fund is NOT to be invested in the stock market, mutual funds, or annuities. The only acceptable investment would be in a money market fund. Don't even use a certificate of deposit (CD). Why am I being so picky? Your emergency fund must be safe and liquid (or quickly convertible to cash without loss of principal). Stock market investments aren't safe, even if they're liquid. Annuities (variable) are often not safe or liquid, due to investment subaccounts and surrender periods. CDs are safe (insured by the FDIC), but they aren't liquid--you can't immediately convert them to cash. Savings accounts or money market funds are both safe and liquid.
Don't have a financial emergency, even to meet the cute paramedics. Keep your money safe and sound and know that there is space between you and a financial disaster.
Be prosperous!
Peggy Doviak
Friday, January 8, 2010
Getting Help
If you watch television at two o'clock in the morning, you've seen the ads for companies promising to help you get out of debt, reduce your bills, and pacify the IRS. Well, this column is a warning. Most of those companies overstate in promises and understate in performance. Yes, some are legitimate, but it is really a "buyer beware" world. Where do you turn for debt reduction advice you can trust?
One of your best bets is to call Consumer Credit Counseling Services, the not-for-profit organization. They can help you devise a plan for managing your debt. Their website will end in .org, not .com. Websites ending in .org are not-for-profit organizations. Companies using .com are commercial endeavors. CCCS can begin to help you get organized. Not only are the commercial sites expensive and of varying levels of competence, but they can also completely destroy your credit, depending on what tactic they choose.
If you owe the IRS money, talk with a good CPA. The CPA can tell you your payment options.
Finally, never pay off credit cards with home equity lines of credit. Depending on your situation, some of the credit card debt could be relieved in bankruptcy. Don't risk your home to pay off your discretionary spending, even though the interest rate is better.
Now, everyone's situation is different, and it's possible that some of this advice won't work for you. However, for most people these are good initial steps.
Be prosperous!
Peggy
One of your best bets is to call Consumer Credit Counseling Services, the not-for-profit organization. They can help you devise a plan for managing your debt. Their website will end in .org, not .com. Websites ending in .org are not-for-profit organizations. Companies using .com are commercial endeavors. CCCS can begin to help you get organized. Not only are the commercial sites expensive and of varying levels of competence, but they can also completely destroy your credit, depending on what tactic they choose.
If you owe the IRS money, talk with a good CPA. The CPA can tell you your payment options.
Finally, never pay off credit cards with home equity lines of credit. Depending on your situation, some of the credit card debt could be relieved in bankruptcy. Don't risk your home to pay off your discretionary spending, even though the interest rate is better.
Now, everyone's situation is different, and it's possible that some of this advice won't work for you. However, for most people these are good initial steps.
Be prosperous!
Peggy
Tuesday, January 5, 2010
Try to Remember!
Yesterday, I gave you a task to write down everything you spend for a month. Today is your second day of that task, and I'd like to offer some suggestions on how to keep track of what you do.
1) If you have a "smart" phone, make a note to yourself.
2) After you finish shopping, call yourself and leave what you spent as a voice message.
3) Buy a little notebook, and carry it in your purse or pocket. That way, it's always with you.
Most people have trouble with this exercise when they are busy and make purchases early in the day. By dinner, that stop at Starbucks is a distant memory!
Be prosperous!
Peggy
1) If you have a "smart" phone, make a note to yourself.
2) After you finish shopping, call yourself and leave what you spent as a voice message.
3) Buy a little notebook, and carry it in your purse or pocket. That way, it's always with you.
Most people have trouble with this exercise when they are busy and make purchases early in the day. By dinner, that stop at Starbucks is a distant memory!
Be prosperous!
Peggy
Monday, January 4, 2010
Personal Cash Flow (We don't like budgets)
Yesterday, I told you that you would have an easy task today, and it's easy, but it will take you a little time to complete it!
I want you to write down every dollar you spend and what you spent it on for one month. I had a client return one time after completing this task, and $2,000 was labeled miscellaneous! Now, I don’t mind if just a little bit of money isn’t categorized, but $2,000 in misc. is a cop out. You need to be honest about how you spend your money. Remember that these are your cash flow decisions, so don’t worry about making me (or somebody else) mad. If you don’t do this honestly, it won’t work.
If you use an ATM card, the withdrawal isn’t the transaction, it’s what how you spent the money. So “ATM” isn’t a category either! If you have a weakness for $5 lattes, write it down. If you like electronics, write it down.
I don’t want you to judge yourself while you do this. There are no wrong answers, just an honest look at where your paycheck’s going. I told you it was easy. Tomorrow, we’ll figure out why this is so important…..
Be prosperous!
Peggy
I want you to write down every dollar you spend and what you spent it on for one month. I had a client return one time after completing this task, and $2,000 was labeled miscellaneous! Now, I don’t mind if just a little bit of money isn’t categorized, but $2,000 in misc. is a cop out. You need to be honest about how you spend your money. Remember that these are your cash flow decisions, so don’t worry about making me (or somebody else) mad. If you don’t do this honestly, it won’t work.
If you use an ATM card, the withdrawal isn’t the transaction, it’s what how you spent the money. So “ATM” isn’t a category either! If you have a weakness for $5 lattes, write it down. If you like electronics, write it down.
I don’t want you to judge yourself while you do this. There are no wrong answers, just an honest look at where your paycheck’s going. I told you it was easy. Tomorrow, we’ll figure out why this is so important…..
Be prosperous!
Peggy
Sunday, January 3, 2010
Budget--a four letter word
Okay, I know that "budget" is a six-letter word, but you know what I mean! Budgeting is an awful process, and yet most of us (me too) need to understand how we spend our money. Since we all hate the word, I propose a new term: Personal Cash Flow.
"Personal Cash Flow" sounds like a corporate process, not a way to keep me from buying those cute Valentine napkins at the discount store that I don't really need! And I think the term is more descriptive.
Your cash flow decisions are personal. At the end of the day, you will spend whatever you want to spend. I might give you some ideas. Your loved ones might have ideas, but it's your choice.
I think when we realize that we actually get to control our money decisions (rather than feeling "acted on" by our money), we begin to change our relationship with money and become more successful. A new task tomorrow (it's easy)..........
Be prosperous!
Peggy
"Personal Cash Flow" sounds like a corporate process, not a way to keep me from buying those cute Valentine napkins at the discount store that I don't really need! And I think the term is more descriptive.
Your cash flow decisions are personal. At the end of the day, you will spend whatever you want to spend. I might give you some ideas. Your loved ones might have ideas, but it's your choice.
I think when we realize that we actually get to control our money decisions (rather than feeling "acted on" by our money), we begin to change our relationship with money and become more successful. A new task tomorrow (it's easy)..........
Be prosperous!
Peggy
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